The US equity markets have recently experienced impressive growth, witnessing three consecutive years of double-digit percentage gains and two successive years of record inflows into Exchange-Traded Funds (ETFs). With crypto trading funds launching and drawing significant attention, the total inflows have surged past the $1 trillion mark. Additionally, AI and tech ETFs have emerged as attractive investment options, contributing to the upward trajectory of major markets since 2023, while data center infrastructure became one of the leading sectors last year. In this discussion, Brian Walsh, head of advice and planning for Sofi, shares valuable insights on these trends and what they mean for investors going forward.
As Walsh outlines, the record ETF inflows seen in 2025 represent a continuation of a trend that began several years ago. This shift is driven by incredible product innovation by ETF issuers, which have expanded their offerings to meet the needs of diverse investors. ETFs have evolved from primarily serving as tools for index investing to becoming more versatile investment vehicles that provide both diversification and cost efficiency.
A significant point discussed was the rise of actively managed ETFs, which had the highest number of launches in 2025. These actively managed funds have outpaced passive ETFs, attracting nearly half a trillion dollars in inflows last year. This shift illustrates how investor interests are evolving, as many are seeking actively managed solutions that offer a level of engagement beyond passive, long-term investment strategies.
Walsh also highlights thematic investing, which focuses on specific trends, such as artificial intelligence (AI), an area that has gained immense traction since 2023. It prompts the question: how will the AI investment theme evolve in 2026? Walsh identifies AI as a long-term structural trend, emphasizing that its rapid growth is based on earnings growth rather than mere speculation. This indicates a solid foundation for continued investment in AI, particularly as capital expenditure on AI infrastructure continues to expand.
As we navigate through 2026, the strategy for investors will likely be centered around diversified exposure to AI. This includes not just traditional tech companies that manufacture chips but also those in data centers, power supply, and cybersecurity that integrate AI into their operations. This comprehensive approach is reflected in Sofi’s newest ETF (AGIQ) which focuses on agentic AI, encompassing both the enablers of AI technology and the companies that adopt AI solutions.
A key takeaway from the discussion is the advent of rules-based ETFs that operate on predefined algorithms. Walsh emphasizes that the growth of these ETFs is less indicative of changing investor behavior or risk appetite but rather reflects the evolution of ETF products themselves. These rules-based or actively managed ETFs serve various investor categories, including defensive investors seeking buffer strategies and income-focused investors exploring alternative income options.
Overall, the insights provided by Brian Walsh exemplify how the investment landscape is evolving rapidly, driven by innovation and the integration of technology into financial products. Investors must stay informed about these trends to navigate the complexities of today’s markets successfully.